THE WALL STREET JOURNAL: International Accounting Rules To Cut Shell 's Reported Assets: “Royal Dutch/Shell Group Monday said the adoption of international financial reporting standards starting next year will have no impact on the oil giant's cash flow, but its net assets are expected to decrease by $4.7 billion and total debt to increase by $200 million” (ShellNews.net) Posted 23 Nov 04

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Royal Dutch/Shell Group Monday said the adoption of international financial reporting standards starting next year will have no impact on the oil giant's cash flow, but its net assets are expected to decrease by $4.7 billion and total debt to increase by $200 million.

Starting in 2005, European Union regulations require listed European companies to comply with the international accounting standards. Shell will implement IFRS for publication of their financial statements in 2005 and will provide reconciliation to U.S. generally accepted accounting principles.

Shell said the international standards also would not have an impact on its financial framework or strategy.

But Shell said that net assets on its balance sheet are expected to decline by $4.7 billion at the adoption of the international standards, while its total debt is expected to increase by $200 million.

In its pension funds, Shell said unrecognized gains and losses at the date of transition – Jan. 1, 2004 – will be recognized and are expected to reflect a $4.9 billion reduction in retained earnings.

Shell also said that the use of the fair value of plan assets under international standards, rather than market-related value, to calculate annual expected investment returns and the changed approach to amortization of investment gains and losses is expected to increase volatility in its net income going forward.

The company said the composition of its net equity will change because cumulative currency translation differences will be recorded as part of retained earnings, which will increase by $1.2 billion as a result.

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